Chapter 3
In order to be ehaustive and achieve the proposed goals managers have to look both internally and
externally to their organization
The external environment
Organizational environment ° All elements existing outside the boundary of the organization that
have the potential to affect the organization.
The organizations external environment has two layers: General and Task environments
General environment (MACRO level) = the layer of the external environment that affects the
organizations indirectly.
Properties
- Outer layer that is widely dispersed
- No reverse influence
- Influence indirectly
Factors are: Technological, Natural, Sociocultural, Economics, Legal/political and International
The Task environment (MESO & BRANCH level) = The layer of the external environment that
directly influences the organizations operations and performance.
Properties
- Closer layer
- Affects organizations directly – influences their operations and performance
- Reverse influence
Factors are = Labour markets, Customers, Competitors and Suppliers.
The internal environment = the environment that includes the elements within the organizations
boundaries.
Factors are = Employees, Culture and Management
The general environment
These dimensions influence the organization over time but often are not involved in day – to – day
transactions with it.
Dimensions
- International
, - Sociocultural
- Economic
- Legal/political
- Natural
- Technological
International dimension
The international dimension of the external environment represents events originating in foreign
countries as well as opportunities for companies in other countries.
1. It influences all other aspects of the external environment
2. The international environments provide new competitors, customers and suppliers and
shape social, technological and economic trends as well.
3. Companies need to pay attention to political, sociocultural and economic factors when
operating globally
Technological
The technological dimension includes scientific and technological advancements in a specific industry
as well as in society at large.
Examples are: handheld devices videoconferencing capabilities, mobile phones, tax machines
Sociocultural
The sociocultural dimension of the general environment represents the demographic characteristics
as well as the norms, customs and values of the general population.
Todays demographic profiles are the foundation of tomorrow’s works force and consumers
Characteristics are geographical distribution and population density, age and education levels.
Economic dimension
The economic dimension represents the general economic health of the country or region in which
the organization operates.
Examples are: Consumer purchasing power, the unemployment rate and interest rates.
Legal – political
The legal – political dimension includes government regulations at the local, regional and national
levels, as well as political activities designed to influence company behavior.
For example = Product safety – requirements, import and export restrictions, legislation and labeling
requirements
In order to be ehaustive and achieve the proposed goals managers have to look both internally and
externally to their organization
The external environment
Organizational environment ° All elements existing outside the boundary of the organization that
have the potential to affect the organization.
The organizations external environment has two layers: General and Task environments
General environment (MACRO level) = the layer of the external environment that affects the
organizations indirectly.
Properties
- Outer layer that is widely dispersed
- No reverse influence
- Influence indirectly
Factors are: Technological, Natural, Sociocultural, Economics, Legal/political and International
The Task environment (MESO & BRANCH level) = The layer of the external environment that
directly influences the organizations operations and performance.
Properties
- Closer layer
- Affects organizations directly – influences their operations and performance
- Reverse influence
Factors are = Labour markets, Customers, Competitors and Suppliers.
The internal environment = the environment that includes the elements within the organizations
boundaries.
Factors are = Employees, Culture and Management
The general environment
These dimensions influence the organization over time but often are not involved in day – to – day
transactions with it.
Dimensions
- International
, - Sociocultural
- Economic
- Legal/political
- Natural
- Technological
International dimension
The international dimension of the external environment represents events originating in foreign
countries as well as opportunities for companies in other countries.
1. It influences all other aspects of the external environment
2. The international environments provide new competitors, customers and suppliers and
shape social, technological and economic trends as well.
3. Companies need to pay attention to political, sociocultural and economic factors when
operating globally
Technological
The technological dimension includes scientific and technological advancements in a specific industry
as well as in society at large.
Examples are: handheld devices videoconferencing capabilities, mobile phones, tax machines
Sociocultural
The sociocultural dimension of the general environment represents the demographic characteristics
as well as the norms, customs and values of the general population.
Todays demographic profiles are the foundation of tomorrow’s works force and consumers
Characteristics are geographical distribution and population density, age and education levels.
Economic dimension
The economic dimension represents the general economic health of the country or region in which
the organization operates.
Examples are: Consumer purchasing power, the unemployment rate and interest rates.
Legal – political
The legal – political dimension includes government regulations at the local, regional and national
levels, as well as political activities designed to influence company behavior.
For example = Product safety – requirements, import and export restrictions, legislation and labeling
requirements
